While institutions own 38% of Cholamandalam Financial Holdings Limited (NSE:CHOLAHLDNG), private companies are its largest shareholders with 41% ownership

Key Insights

• Significant control over Cholamandalam Financial Holdings by private companies implies that the general public has more power to influence management and governance-related decisions
• The top 5 shareholders own 53% of the company
• 38% of Cholamandalam Financial Holdings is held by Institutions

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Every investor in Cholamandalam Financial Holdings Limited (NSE:CHOLAHLDNG) should be aware of the most powerful shareholder groups. We can see that private companies own the lion's share in the company with 41% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Institutions, on the other hand, account for 38% of the company's stockholders. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders.

In the chart below, we zoom in on the different ownership groups of Cholamandalam Financial Holdings.

View our latest analysis for Cholamandalam Financial Holdings

What Does The Institutional Ownership Tell Us About Cholamandalam Financial Holdings?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

Cholamandalam Financial Holdings already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Cholamandalam Financial Holdings' historic earnings and revenue below, but keep in mind there's always more to the story.

Cholamandalam Financial Holdings is not owned by hedge funds. Murugappa Group Ltd. is currently the company's largest shareholder with 38% of shares outstanding. Nippon Life India Asset Management Limited is the second largest shareholder owning 5.7% of common stock, and ICICI Prudential Asset Management Company Limited holds about 3.2% of the company stock.

Our research also brought to light the fact that roughly 53% of the company is controlled by the top 5 shareholders suggesting that these owners wield significant influence on the business.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Cholamandalam Financial Holdings

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders own some shares in Cholamandalam Financial Holdings Limited. The insiders have a meaningful stake worth ₹19b. Most would see this as a real positive. It is good to see this level of investment by insiders. You can check here to see if those insiders have been buying recently.

General Public Ownership

With a 13% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Cholamandalam Financial Holdings. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Company Ownership

It seems that Private Companies own 41%, of the Cholamandalam Financial Holdings stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Cholamandalam Financial Holdings , and understanding them should be part of your investment process.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.